How to spot and avoid pension scams
A pension scam is where a scammer will promise opportunities with high returns and low risk, or say they can help you avoid tax and find legal loopholes, or give you early access to your pension in exchange for a fee. In these kinds of scams, you could lose some or even all of your hard-earned pension savings, and pay a penalty for accessing your pension money early.
These scams are often characterised by an offer that seems too good to be true. The scammer will normally promise you early access to your pension (referred to as pension liberation) or that you can access part of your pension as a loan. Other scams might be around ‘guaranteed returns’. Doing any of these can have quite big repercussions on your pension pot as you might not be able to get the money back.
Pension scams often include:
- the promise of a guaranteed better return on your current pension savings
- the use of high-pressure sales tactics to force you to make a decision you’re unsure about
- unusual investments (these will generally be unregulated and high risk)
- complicated structures (so it’s not clear where your money’s going)
- several groups that could all take a fee (some of them could be overseas and the total amount deducted from your pension could be quite significant)
How does Octopus Money help keep your pension safe?
As part of the transfer process our platform, SECCL, will do due diligence on any pension provider where they haven’t previously conducted a transfer before. This ensures they see their pension terms and other important documents before transferring the pension away.
Octopus Money will always ask you for your reason for transferring your pension to another provider. We do this so we can gather feedback but also as a control to ensure we spot any unusual reasons. This might seem like a bit of a hassle, but it’s all to keep your money safe.
Top tips for avoiding pension scams
- If you receive a call or email out of the blue from a pension provider you haven’t engaged with yourself, be careful to not share any information with them before checking they are who they say they are. Google the number they’re calling from and see if it matches the number on the company website. You could even hang up and call the number on the website directly. No one from a legitimate company will be upset or angry that you want to check and stay safe.
- If someone calls you pretending to be from your bank, you can hang up and call 159 to speak directly to your bank. This helpline is run by Stop Scams UK.
- Your pension is your lifetime of savings for retirement. There’s no quick win to increase the pot of your pension so if you’re being offered guaranteed returns then it’s likely to be a scam. In finance returns can never be guaranteed.
- Use this resource on the FCA website for more information on how to protect yourself from pension scams : https://www.fca.org.uk/consumers/pension-scams.
